Ivanhoe PFS reports robust metrics for Kamoa copper project

23rd February 2016 By: Henry Lazenby - Creamer Media Deputy Editor: North America

TORONTO (miningweekly.com) – Africa-focused project developer Ivanhoe Mines has reported strong results of a prefeasibility study (PFS) that was undertaken to develop the first phase of its Kamoa copper project, located in the Democratic Republic of Congo (DRC), the company said on Tuesday.

An independent PFS by OreWin, Amec Foster Wheeler E&C Services and SRK Consulting had calculated an after-tax net present value (NPV), using an 8% discount, of $986-million, and an internal rate of return (IRR) of 17.2%. The economic analysis used a long-term price assumption of $3/lb copper.

This would result in a payback period of 4.6 years on the preproduction capital requirement of $1.2-billion, which came in $200-million lower than previously estimated in the Kamoa preliminary economic assessment of 2013.

The first phase of development would produce about 100 000 t/y of copper, at a mine-site cash cost of $0.75/lb. The underground mine was expected to produce ore at a rate of three-million tonnes a year, grading 3.86% copper over a 24-year mine life.

First-phase output would entail a high-grade concentrate grading 39.2% copper and low impurity levels such as arsenic.

Ivanhoe advised that a controlled convergence room-and-pillar mining method, pioneered by Polish base metals miner KGHM, could be well suited to the Kamoa deposit and, if implemented, could potentially provide further significant cost savings, as there would be no requirement for cemented backfill and ore extraction ratios would increase. Should the method be deployed, mine site costs could fall as low at $0.61/lb.

This could boost the NPV to $1.18-billion and the IRR to 18.9%, reducing the payback period to 4.3 years.

The first phase of mining would target high-grade copper mineralisation from shallow, underground resources to yield a high-value concentrate. The planned second phase would entail a significant expansion of the mine and mill, and construction of a smelter to produce blister copper.

Ivanhoe said that a phased logistics solution was proposed for the Kamoa project. Initially, the corridor between southern DRC and Durban, in South Africa, was viewed as the most attractive and reliable export route. However, as soon as the railroad between Kolwezi and Dilolo, a town near the DRC-Angolan border, had been rehabilitated, Kamoa’s output was expected to be transported by rail to the Port of Lobito, in Angola.

The Kamoa project – a joint venture between Ivanhoe Mines and Zijin Mining Group – had been independently ranked as the world’s largest, undeveloped, high-grade copper discovery by international mining consultant Wood Mackenzie.

Ivanhoe owned a 49.5% interest in Kamoa Holding, an Ivanhoe affiliate that presently owned 95%, on an indirect basis, of the Kamoa project. Zijin Mining owned a 49.5% interest in Kamoa Holding, which it acquired from Ivanhoe in December for $412-million in cash. The remaining 1% interest in Kamoa Holding was held by privately owned Crystal River Global.

A 5%, free-carried and nondilutable interest in Kamoa Copper, the affiliate that owned the Kamoa project, was transferred to the DRC government on September 11, 2012, according to the DRC Mining Code. Ivanhoe had also offered to transfer a further 15% interest to the DRC government on terms to be negotiated. The company reported that “constructive” and “cordial” negotiations between Ivanhoe Mines, Zijin and senior DRC government officials had been continuing in this regard.